Unocal provides deepwater Indonesia update

El Segundo, Calif., Aug. 2, 2004 - Unocal Corporation (NYSE: UCL) today provided an update on the activities of its subsidiaries, Unocal Ganal, Ltd. , Unocal Rapak, Ltd., and Unocal Makassar, Ltd., in the deepwater offshore Indonesia, including preliminary development plans, the results of recent appraisal drilling and the status of operations at West Seno.

Gendalo targeted for 2007

Unocal and its partner, Eni, have selected a development concept for the first phase of the Gendalo Field development project in the Ganal production sharing contract (PSC). Final engineering design will begin immediately and the plan of development is expected to be submitted to the government later in the year. This first phase will be designed to produce 250 - 300 mmscfd. The project is targeted for a 2007 startup depending on government approvals. The project will target existing contract requirements for the Bontang gas market and new sales.

Gehem-Ranggas joint development planned

The Gehem discovery, made in 2003, has provided the opportunity for a joint deepwater development with the nearby Ranggas field using a common host facility. Development concept investigation and engineering are in process for the joint development. New 3-D seismic acquisition across the two fields is underway for use in the development planning. The company expects to submit a plan of development for the Gehem-Ranggas field in 2005.

Gehem & Ranggas appraisal well results

In support of the joint development, Unocal Ganal, Ltd. and Unocal Rapak, Ltd., have also completed drilling operations at the Gehem-3 and Ranggas-7 appraisal wells.

The Gehem-3 well, located in the Rapak PSC, was drilled 1.7 miles north of the Gehem-1 discovery well and 3.2 miles northwest of the Gehem-2 well. Gehem-3 was drilled in 5,744 feet of water. Drilled to a total vertical depth of 16,424 feet, the well encountered 232 feet of net gas pay and 8 feet of net oil pay. The appraisal well results indicate consistent reservoir pressure across the entire primary reservoir pool in this field and a potential single hydrocarbon pool with high-quality reservoir rock.

The Ranggas-7 well, in the Rapak PSC, was drilled to a total vertical depth of 14,402 feet in 5,394 feet of water. The well is located 4.7 miles northeast of Gehem-3. A total of 167 feet of net pay was encountered, including 52 feet of oil. Ranggas-7 was drilled to delineate the downdip and eastern limits of the primary Ranggas development area and to penetrate the deeper primary reservoir unit of the field. The appraisal well did not encounter hydrocarbons in the deeper zone. In the shallower zone, however, hydrocarbons were penetrated as far as 400 feet downdip of the Ranggas-1 well (located 0.6 miles west of Ranggas-7).

Gula appraisal well results

Earlier in 2004, additional appraisal activity was also performed on the Gula structure. The Gula-3 well was drilled 3.5 miles south of the Gula-1 discovery well. The well, located in the Ganal PSC area, was drilled in 5,990 feet of water to a total vertical depth of 17,502 feet. This total depth is more than 1,000 feet deeper than was drilled in Gula-1. Gula-3 encountered 327 feet of net gas pay and 6 feet of net oil pay.

Unocal Ganal is operator of the Ganal PSC area and Unocal Rapak is operator of the Rapak PSC area and each holds an 80-percent gross working interest under its respective PSC. Eni-Ganal, Limited, and Eni-Rapak, Limited , subsidiaries of Eni (NYSE: E), holds the remaining 20-percent gross working interest under each respective PSC.

West Seno field update

The West Seno field, operated by the company's Unocal Makassar, Ltd. subsidiary, currently has 20 completed wells, with gross production averaging 24,000 BOE per day in June, which is a 7,000 BOE per day increase from April. By year-end 2004, 26 to 28 wells are expected to be online with an expected exit rate (gross) of 25,000 to 35,000 BOE per day.
Bids were recently opened for Phase 2 development, including offshore installation and tension leg platform fabrication. The company believes that the bid results were unacceptably high. Accordingly, cost reduction options are being considered, and the construction period is expected to extend beyond 2005.

West Seno, located in the Makassar Strait PSC area, was discovered by Unocal in 1998. The field lies about 118 miles northeast of Balikpapan in water depths of approximately 3,200 feet.

Unocal Makassar operates the PSC and has a 90-percent gross working interest. Pertamina Upstream, a unit of the Indonesia state-owned oil and gas company, holds the remaining 10% gross working interest. West Seno is the first deepwater oil and gas project in Indonesia.

This news release contains forward-looking statements about matters such as Unocal's assessment of the quality, characteristics and extent of hydrocarbon formations and potential resources, drilling and development plans, project startup dates, and future production rates and timing. Although these statements are based upon Unocal's current expectations and beliefs, they are subject to known and unknown risks and uncertainties that could cause actual results and outcomes to differ materially from those described in, or implied by, the forward-looking statements, including changes in commodity prices and the effectiveness of the company's hedging activities to manage that volatility; the company's ability to develop the deepwater fields and other large projects discussed in this release in a timely and cost-effective manner; the accuracy of the company's estimates and judgments regarding hydrocarbon resources and formations; decline rates of producing properties in which the company has an interest; adverse geological and other operational factors; the extent of the company's operating cash flow and other capital resources available to fund its capital expenditures; international and domestic regulatory, political, and economic factors; performance by third parties, including foreign government entities, joint venture partners, and independent contractors; and other risks and uncertainties discussed in Unocal's 2003 Annual Report on Form 10-K, as amended, and subsequent reports filed by Unocal with the Securities and Exchange Commission (SEC File No. 1-8483). Copies of the company's SEC filings are available from the company by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also available on the Unocal web site. Unocal undertakes no obligation to update the forward-looking statements in this news release to reflect future events or circumstances.